Consumption of dairy products in China will reach 60 million tons by 2020

Date: 2017-05-22

Donald Xu, Business Director Dairy China, reported the situation in this sector in China at the “BIOMIN Information Days. Dairy farming” workshop.

The DairyNews reports that according to expert forecasts, production and consumption of dairy products in the country will grow and reach 60 million tons by 2020.

Most of the cow herds in China are located in three provinces: Inner Mongolia (23.4%), Heilongjiang (14.6%), and Hebei (12.3%). According to official data from the Government of China for 2015, the total cow population in the country was 14.85 million, but in reality, the reported data are often overstated by the farmers to elevate their farms’ status. This means that the real number of cows is about 8 million. About 49% of the farms have around 100 cows/farm. Of the rest of the farms, 4,000 keep more than 500 cows/farm, 2,000 keep over 1,000 cows/farm, and 70 farms have over 10,000 cows/farm.

There is a ranking of the fifteen largest milk producing operations in China. BIOMIN is working with three of them, including the Modern Dairy “giant”. Also, there are TOP-5 farms with an average milk production 12.000 L/cow/year where BIOMIN is also active: Dongyin Aoya, Jialihe 8, Pinjipo 3, Aoya Xianhe, and Snayun Changyang 3.

“In the last decade, milk production in China has increased from 27 to 37.5 million tons. According to our forecasts, the production increase will continue and reach 60 million tons by 2020 and over 70 million tons by 2030. In different regions, milk yield varies from farm to farm, but, nevertheless, the average milk yield in 2015 was 6,000 kg/cow/year; in 2017 it is expected to achieve 7,000 kg/cow/year”, Mr. Xu said.

According to Donald, the quality of milk products and their consumption in China are also rising. All qualitative milk parameters are strictly regulated by the government; if they fail to meet the requirements, the operations are fined. Protein content in milk should be not lower than 3%, fat content – not lower that 3.8%. “Of course, as everywhere in the world, there is a certain category of people who think that milk is harmful and can cause certain diseases, such as cancer, but the government and the majority of people think that it is healthy, and they consume dairy products”, Mr. Xu said. In China, the government stimulates consumption of milk products, and is planning to increase its volumes thanks to the young population of the country, who consume predominantly yogurts and ice cream. Milk is promoted as a source of calcium among the older generation. Of all the milk supplied to the Chinese market for consumption, 95% is ultra-heat-treated. Pasteurized milk is sold in large cities only, such as Beijing, Shanghai, Guangzhou, and Fuzhou.

According to Donald Xu, the number of farms with more than 100 cows has increased from 19 to 48% since 2008. Previously, private households kept the highest number of cows, but it was difficult to control the quality of milk in those conditions. For that reason, since 2008 the government has abolished subsidies to stimulate building larger farms with more modern technologies and effective management, which supports their competitiveness on the market.

Starting from 2008, raw milk prices were constantly rising, and peaked at 4.1 yuan in 2014; today, the average price is 3.5 yuan/kg. The average cost of production of milk is 3 yuan/kg.

In spite of the increase in milk production and consumption, China remains a large importer of milk products. Donald noted that until 2014, imports of milk powder from New Zealand had been steadily growing, but since 2014, following a collective appeal from farmers, the government has been taking measures to restrict milk powder imports. Currently, the volumes of milk powder imports to the country are 600,000 tons/year. The volumes of liquid milk import are also growing, mainly from Europe.

“Milk consumption is moving forward not only the milk industry, but the economy of the country as a whole, involving many related industries”, Donald Xu concluded.

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